Macy's Cuts Full-Year Forecast, Blames Harsh Winter Weather

Macy's (M) cut its full-year same-store sales forecast, after second-quarter sales failed to make up for weakness in the first quarter when harsh weather kept shoppers away.

Macy's earnings for the quarter ended Aug. 2 also missed the average analyst estimate as the company discounted heavily to win business, squeezing gross margins.

Shares of the company, which also owns the high-end Bloomingdale's chain, were down 5 percent in early trading Wednesday.

%VIRTUAL-pullquote-Many customers still are not feeling comfortable about spending more in an uncertain economic environment.%Macy's said it expects same-store sales to increase 1.5 percent to 2 percent for the full year. It had earlier forecast an increase of 2.5 percent to 3 percent.

"Many customers still are not feeling comfortable about spending more in an uncertain economic environment," Chief Executive Officer Terry Lundgren said in a statement.

The company, which has remodeled many stores, including its flagship Herald Square store in Manhattan, plans more promotions and discounts for the important back-to-school season as it tries to make up for lost sales.

The company stuck to its full-year earnings forecast of $4.40 to $4.50 a share.

Analysts remained positive on Macy's long-term prospects.

"Its focus on improving the merchandise assortment while enhancing the customer experience both in stores and online will likely continue to drive strong results," Stifel Nicolaus analysts wrote in a research note.

Three brokerages including Stifel reiterated their "buy" ratings on the company's stock.

Macy's has spent nearly $2 billion in IT and e-commerce projects over the past five years and has benefited from services such as in-store pickups and ship-from-store.

The ship-from-store service allows customers to order from another Macy's store if the item is not available and have it sent to their home. This helps Macy's keep a tight hold on inventories, especially at its smaller stores.

The in-store pickups will be available at all Macy's stores in the fall and holiday shopping season, the company said.

Same-store sales, which include sales at macys.com and bloomingdales.com, rose 3.4 percent in the second quarter.

Net income rose to $292 million, or 80 cents a share, from $281 million, or 72 cents a share, a year earlier.

Total sales rose 3.3 percent to $6.27 billion, after declining about 2 percent in each of the previous two quarters.

Analysts on average had expected earnings of 86 cents a share on revenue of $6.3 billion, according to Thomson Reuters I/B/E/S.

Shares of the company were down 4.7 percent at $56.95 in early trading.

11PHOTOS

Name Brand or Generic? 10 Items Where Choice Pays Off

See Gallery

Macy's Cuts Full-Year Forecast, Blames Harsh Winter Weather

Dried herbs and spices have identical ingredient lists. The only difference is the method used for drying them, and if you're not able to easily determine that information, the generic version is as good as the name brand. The exception is from a store that does the drying for you –- but you'll usually be paying a stiff premium for that.

They're just trash bags, but you want to be choosy about what you throw your garbage in. With generic bags, you generally have to stop filling them about two-thirds of the way full or they'll easily rip, whereas with a higher quality bag, you can fill it to the rim without ripping. Thus, it's usually worth paying as much as a 50 percent premium per bag to get the name brand version. I personally use Glad ForceFlex bags, which, when bought in bulk, meet that 50 percent threshold.

The petroleum industry is so heavily regulated that the gas available at one station is, for all practical purposes, the same as the gas at another station. Let the price lead you when it comes to fueling up.

Generic paper products, such as toilet paper, paper towels, and paper plates, have a tendency to shred and fall apart at the least opportune times. To clean up a mess, you'll often have to use twice as much. And with paper plates, you often have to double-layer them if you don't want your food to slide off the plate. Why not just pay a little more to get durable products and create less waste? The cost-per-use is a lot lower.

This is a perfect example of how comparing ingredients and nutrition facts makes all the difference. Almost always, you'll find that they're identicalamong different brands of sugar and salt. There's no reason to go for a name brand here.

When you're in a situation where you need a baby wipe, you want to be able to grab something that works to clean up the mess. Generic baby wipes are often dry right out of the package and sometimes fall apart mid-use. My solution is to skip both the generics and name brands and use a squirt bottle of a gentle cleaning solution along with a bunch of soft washcloths. They always work, and they're reusable – just toss them in the laundry.

The difference between electronic cables of the same type is negligible. Much like gasoline, the specifications on these cables are so tight that there's little variation between cable brands. Just choose the cable that meets your needs in terms of length and adapter, and buy the one with the lowest price.

Off-brand electronics are more likely to have poor customer service support in the event of a failure, as many generic electronic companies are based overseas and have unresponsive departments. Before you buy electronics, make sure the customer service department for that company has good marks, or you may find yourself with a $1,000 black box you can't return or do anything with.

For most types of breakfast cereal, such as bran flakes, corn flakes and so forth, the generic cereals are indistinguishable from the brand name ones. If you often start your day off with a bowl of cereal and a healthy splash of milk, give the generic version of your favorite cereal a try. Such cereal is often sold in bags, so save your old box and put the new bag inside for easier storage.

The big difference between a good diaper and a bad one is the dreaded "blow out" – when a baby's outfit quickly goes from "cute" to "disaster." Most comparison studies find an enormous difference between generics and name brands; check out this disposable diaper comparison review for details. (Better yet, go cloth. We love them.)